Usman Salis
Silver prices declined over 0.55% following the Federal Reserve's decision to hold rates steady amid concerns over economic uncertainty caused by Trump's trade policies.
Silver (XAG/USD) Falls After Fed Meeting Highlights Trade Policy Concerns
Silver prices experienced a notable decline on Wednesday, finishing the day with a loss of over 0.55% after the Federal Reserve maintained its current interest rate policy. The central bank specifically highlighted growing uncertainty in the economic outlook, attributing these concerns to the United States trade policies implemented by President Donald Trump. At the time of writing, the XAG/USD pair trades at $33.78, having retreated from a daily high of $34.09.
Technical Analysis Points to Further Silver (XAG) Weakness
Recent price action over the last several days suggests additional downside pressure may be building for silver prices. Technical analysts note the formation of a 'quasi-shooting star' pattern followed by a 'hanging man' candlestick – both bearish indicators signaling that sellers are successfully driving the XAG/USD pair beneath the psychologically important $34.00 threshold.
Silver (XAG/USD) Support and Resistance Levels Under Close Watch
If the current bearish momentum continues, market observers anticipate that silver could experience a more significant retracement, particularly if prices drop below the February 14 daily peak of $33.39. A breach of this key support level would likely expose the $33.00 figure, potentially triggering additional selling pressure.
Upside Potential for Silver (XAG) Limited by Technical Barriers
Despite the current downtrend, silver still maintains upside potential should market conditions shift. If XAG/USD manages to reclaim ground above the $34.00 mark, traders will be watching for resistance at the October 30, 2024 peak of $34.51. Beyond this level, the $35.00 psychological barrier represents the next significant hurdle for silver bulls to overcome.
The Federal Reserve's cautious stance highlights growing concerns about how newly implemented trade policies might impact inflation trajectories and economic growth in the coming months. Silver, which often serves as both an industrial metal and inflation hedge, appears caught between these competing market narratives.
The precious metal's sensitivity to both monetary policy and industrial demand makes it particularly vulnerable to shifts in the economic outlook. With the Fed acknowledging increased uncertainty in the economic landscape, traders are reassessing their positions in silver and other precious metals.
Market participants are closely monitoring upcoming economic data releases that might provide further clarity on how trade policies are affecting manufacturing sectors and global trade flows – both significant factors in determining silver demand and pricing.
Volume indicators suggest that the recent price action represents a genuine shift in market sentiment rather than merely technical repositioning, with increased selling pressure evident as prices approached recent resistance levels.
For investors with longer time horizons, the current price action presents an important decision point, as silver remains substantially higher than its levels from earlier in the year but is showing signs of potential correction after its impressive run.
Usman Salis
